Rep.: Pa. flood policyholders need life raft

Tiny Yardley Borough, perched along the Delaware River, has been one of the nation's most flood-prone communities - emblematic of the problems that have swamped the profoundly indebted National Flood Insurance Program.

NFIP has paid out almost $25 million for flood losses since 1978 to property owners in the borough of just 2,400 people, most of that on structures that have flooded at least twice.

After years of brutal losses, NFIP stands $23 billion in debt to the U.S. Treasury, and is looking to Yardley, and other floodplain towns across the country, to help it stay afloat.

In Yardley, it has raised rates as much as 800 percent, in one case bumping up an annual premium of $3,000, to $27,000.

Now, State Rep. Steve Santarsiero (D., Bucks) wants the state to intervene.

At a news conference Friday in Yardley, he called for the creation of a state flood insurance task force to find ways to lessen the impacts of radically rising rates, perhaps, he said, through state subsidies.

Warning that the new premiums might end up pricing people out of homes they can't sell, Santarsiero said that "entire neighborhoods overnight could become ghost towns. The state needs to act."

Santarsiero introduced his task force bill last week. But it's unclear how much support it or a new state expenditure would have in Harrisburg. Pennsylvania is already confronting a budget shortfall of more than $1 billion. And Democratic Gov. Wolf and the GOP-controlled legislature have just embarked on what's likely to be a protracted battle over next year's spending plan.

That fight in Harrisburg is mostly over education funding, a tax on natural gas drilling and changes to the pension system and retail liquor sales. Rising flood insurance premiums affect fewer than 25,000 property owners in Pennsylvania, several thousand of those in Philadelphia's five-county region, according to federal statistics.

Yardley has been especially problematic. It was first settled in the early 18th century, but flooding there didn't become a federal issue until the early 1970s, after the creation of the National Flood Insurance Program and the drawing of flood maps.

Homes built before then were enticed into the program with deeply subsidized rates. Yardley, which suffered three major floods a decade ago, has 200 such properties. And more than 170 of its structures are designated as "repetitive loss properties," meaning they have flooded two or more times.

Many of the houses damaged or destroyed as a result of Hurricane Katrina, in 2005, carried heavily subsidized insurance policies. While the borough was still recovering from Katrina, Sandy, in 2012, piled on more debt.

After Katrina, lawmakers moved to phase out the subsidies.

The pain was immediate for Drew Ferrara and Connie Kaminski. Last year, premiums for their real estate office near the river in Yardley jumped from about $3,000 a year to nearly $27,000. Luckily, they said they were able to work out a deal on insurance with their private mortgage lender.

But Scott Burgess, who lives in neighboring Lower Makefield Township, said he saw his annual rates rise from about $2,300 to $4,000. He said he had to reduce the coverage on his policy to decrease the premiums to $2,600.

"I have neighbors who are having a hard time selling their homes," said Burgess, who leads the community group Residents Against Flood Trends, known as RAFT.

Pennsylvania appears to be among the first states to try to address the rising rates. Last year, Florida passed a law that allows private insurers to sell more bare-bones policies that cover less value and offer higher deductibles.

If his bill passes, Santarsiero said the task force would have six months to come back with recommendations.

"And by then, hopefully we'll have a budget," he said.

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